Will SJC Learn How to Manage Airport Tenants from High Tech?

San Jose City Council to consider airport development to house Google planes SAN JOSE — The San Jose City Council on Tuesday is poised to bolster thecity’s cash-strapped airport by approving an $82 million facility forprivate and corporate jets, including the growing fleet owned by Google’sco-founders Larry Page and Sergey Brin now parked up at Moffett Field.

But the city’s top choice of Signature Flight Support and its primary tenantBlue City Holdings, a company that manages aircraft for Page, Brin andGoogle’s executive chairman Eric Schmidt, hit a snag recently when the chiefcompetitor to develop the west side of the airport appealed the city staff’srecommendation so the council will first consider Atlantic Aviation’s casebefore taking a vote on the project.

Atlantic was disqualified because it didn’t fulfill the requirements of thebidding process.

Mayor Chuck Reed has called Atlantic’s appeal a delay tactic. Reed said thatwhen the bid parameters were published for aviation development on the29-acre site, Atlantic did not return to the city with “a proposal to dodevelopment. They just want to hold onto the lands,” he said, therebyavoiding any competition with another fixed-base operator.

“They chose not to respond to that and just assert their position that we donothing,” said Reed.

In documents filed with the city on Monday, aviation experts hired byAtlantic allege that the airport’s proposed west side development will”introduce significant concerns relative to safe airfieldoperations.”

In an email to this newspaper, Atlantic CEO Louis Pepper also reiterated thepossible negative impact the development would have on his company.

“Atlantic Aviation has serious concerns about the airport’s intention tomove forward with new development before addressing all safety and planningissues that impact airport operations,” Pepper said. “We’ve asked theairport to address these issues for over two years. Atlantic is still facedwith the possibility of losing close to 50 percent of our ramp space,crippling our business. … We support Google coming to the airport, wesimply believe these safety and planning issues must be resolved first.”

“Safety of the flying public is our number one priority,” said Sherry, whobacks Signature’s proposal. “We never ever do anything that would compromisethat — and I take that very seriously.”

Like Reed, Sherry pointed out that Atlantic’s appeal will be decided by theCity Council based on documents provided by Atlantic to the city — whichthe city attorney’s office also has deemed to be an inadequate response byAtlantic. The company said it offered the airport up to $295 million over 25years to ensure the airport’s vacant land was put to its highest and bestuse.

In an April 4 letter to the mayor and City Council, City Attorney Rick Doyleand senior deputy city attorney Kevin Fisher wrote that Atlantic failed torespond to nine items that were “material provisions” of the bid, includinga proposal bond; financial references; a financial pro forma; a managementplan; a rent proposal; property, sales and use tax proposals; and the city’srequired labor peace-employee work environment form.

“The city cannot waive Atlantic’s errors, because accepting a proposal withsuch material omissions would result in Atlantic gaining a competitiveadvantage over the proposer that complied with all of the … submittalrequirements,” said the memo.

Signature proposes seven airplane hangars, five of which would house theGoogle fleet and two others that would accommodate private jets used byother members of Silicon Valley’s corporate elite.

But Atlantic, which has invested $60 million since 2007 to expand andupgrade its operations, has said that it already has the capacity to meetcurrent demand for corporate and private pilots.

The Signature deal would provide at least $3 million annually in rent andother fees to the city-owned airport. The new facility would include 270,000square feet of building space on the west side of the airport grounds.Sherry has estimated the project would create 150 to 200 airport andregional construction jobs, 36 permanent jobs and as many as 370 other jobs.

Ken Ambrose of Blue City Holdings is hoping the council will endorse theSignature proposal and allow his company to break ground this summer becauseGoogle’s executives’ lease at Moffett Field runs out by next summer.

“That would be a best-case scenario,” he said, adding that officials atNASA, the federal agency that controls Hangar One, which Google executiveshad offered to pay $33 million to renovate in exchange for the right to use,have never responded.

“We didn’t jump, we were pushed,” said Ambrose of their plight to relocateto another airport facility.